‘Circular economy is the most pressing challenge’


It has been a challenging year. Should sustainability remain a key focus? How has SMA, specifically, continued to work toward its goals during this time?

I think sustainability should remain a key focus. The Covid-19 crisis has shown what is possible when all players pull together. This momentum should be used to make the economy more sustainable and resilient after the crisis. At SMA, we have driven our sustainability measures further throughout the year. We have set ourselves ambitious sustainability goals in different areas, such as CO2 emissions, corporate citizenship, material use and waste, etc., on a company level, and on a product level. We are constantly working toward achieving our 2025 goals – and we make good progress.

Product level targets
DriverTarget by 2025
Use of renewable energy sources50% ratio of renewables in total energy consumption
Quality/longevity1% field failure rate
Design for recycling/disassembly90% of recyclable product components
Preferrable materials25% increase in the ratio of secondary
raw materials used
Product footprint25% reduction in CO2 emissions in kg/kW of
inverter output
Use of materials30% reduction in product weight in kg/kW of
inverter output
Non-preferrable materials15% reduction in the quantity of
non-preferrable materials
Waste50% reduction in special waste disposal

In an interview last September, you said SMA “nearly cut in half the energy consumption as well as the CO2 emissions per produced kilowatt of inverter output between 2015 and 2018. We have also increased the amount of self-produced solar power in our total electricity consumption from 32% to 40% within the same period of time.” How have these numbers changed between 2018 and 2020?

In 2019, we reduced our energy consumption per produced kilowatt by 18% and our CO2 emissions per produced kilowatt by 12%. The percentage of self-produced solar power remained largely the same in 2019. I cannot share any numbers for 2020 yet, as we will compile the respective data only after the end of the year and publish them in our non-financial statement 2020 in March.

You also said the following: “In our product development process, we are developing further criteria for materials to be excluded or reduced to make our products even more sustainable.” What specific progress has been made here?

We have implemented these criteria into our Guideline for Sustainable Product Design. This guideline is now an integral and binding part of the product development process at SMA. All newly developed products must comply with the specifications laid out there, which will make each new product generation more sustainable than its predecessors. The specifications refer to topics such as the longevity of our products. Here, we are working on reducing wearing parts, keeping the maintenance aspect in mind during device development so that wearing parts can be replaced during scheduled servicing before major repairs become necessary, and using efficient maintenance manuals. Other focus areas are design for recycling and disassembly, resource efficiency, and the definition of “non-preferable materials” that need to be reduced as well as “preferable materials,” which we would like to use more.

In an interview in June, Corporate Sustainability Manager Matthias Schaepers said SMA is committed to omitting 15% of non-preferable materials by 2025. Is this target enough to be truly sustainable? What has been done thus far?

Our target to reduce these materials by 15% by 2025 is ambitious. We have to consider the whole value chain from raw material extraction to disposal, and all dimensions, such as ecological, environmental, health, or human rights impacts. It is a challenge to find materials that meet these requirements and, at the same time, have the properties we need to develop efficient and powerful inverters. So, we have to set ourselves ambitious but realistic and achievable targets. Once we have achieved one target, we will take on the next challenge and go one step further in defining the next target.

Schaepers also said SMA is committed to raising the proportion of recyclable materials in its inverters to 90% and lowering the amount of CO2 produced during inverter production by 25%, among several other goals it set itself to achieve by 2025. What are the other goals? What progress has been made on the other two areas?

Within our sustainability strategy, we have outlined the targets we want to achieve by 2025 on a company level and on a product level. We have published them in our non-financial Statement 2019 (see table below).

Company level targets
DriverTarget by 2025
ProfitabilityIncrease in EBITDA margin to >5%
Quality1% field failure rate
Sustainable suppy chain55% overall score for suppliers in EcoVadis assessment
Corporate citizenshipIncrease in CC index by 5%
CO2 emissions50% reduction in scope 1+2 CO2 emissions in kg/kW
of inverter output produced
Waste25% reduction in waste per metric ton of
product produced
Use of materials25% reduction of the ratio of material input to
product output
Accident frequencyLost time incident rate of <1.5

Creating a circular economy is, arguably, the key to a low carbon, green future. SMA has devised its own circular economy strategy, focused on longevity, repairability, reusability, and recycling. What concrete progress have you made in this area?

Most of the categories in our product level targets are targets related to our circular economy strategy. We have started several programs, closely working together with suppliers and recyclers. We will see the results over the next years, but it is too early to communicate on any progress before reaching major milestones. Our credo is to deliver first and communicate afterward.

Recycling is crucial, yet there is still no process in place to ensure all sold inverters are responsibly dealt with. Last year, you said SMA is working with a recycler in Germany to trial a collection and treatment process. At what stage is the trial?

So far, we have tested the procedures on a small scale and are currently working on how to scale them up and standardize them for different inverter categories. This is part of a holistic, sustainable end-of-life concept we are working on internationally for all of our inverters.

Environmental, social, and corporate governance (ESG) reporting is becoming increasingly important for investors. How does this play a role at SMA?

ESG investment is a powerful lever that helps make the economy as a whole more sustainable. ESG reporting that adheres to internationally recognized reporting standards, such as the Global Reporting Initiative (GRI), helps investors decide whether a company is truly sustainable or not. Large capital market-oriented companies registered in the European Union have to report on their ESG performance on a yearly basis, and this is what SMA does within the framework of the GRI standard. We would appreciate if such reporting would become mandatory on a global scale. This would help to prevent greenwashing.

What are the most pressing sustainability challenges for inverter companies, and what plans do you have to further improve SMA’s footprint?

Circular economy topics are most pressing and challenging, and electronic waste is a big topic here. Another dimension that goes beyond that is not only to use as much recycled material as possible, but also to reduce the material used overall. This means that we have to further increase the material efficiency of our inverters and produce more power with less material – which in the end means fewer inverters and other electronic components in a power plant. We also observe that there are more and more requirements to measure the effects of products across all categories, so inverter manufacturers will have to declare which environmental and social effects their products have. This may result in a product passport that has to be delivered with each device. As for SMA, we will continue in 2021 to work toward our company and product targets lined out for 2025.

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